FinTech 2020 looks at changes going on in the world and the opportunities to grow FinTech globally

2. George Vukotich, Ph.D.
- Startups - 1871, FinTank
- Parents from Serbia and Germany to the U.S. after WWII
- Grew up in Chicago - Community, Schools, Jobs, College
- Fortune 500 - IBM, Accenture
- University - Professor, Department Chair, Dean, Administrator, Board Member
- Military

3. DEFINING FINTECH
Financial technology, often shortened to fintech, is the
technology and innovation that aims to compete with
traditional financial methods in the delivery of financial
services. It is an emerging industry that uses technology to
improve activities in finance.
BETTER FASTER CHEAPER
FUTURE – CREATE SOMETHING NEW THAT DOES NOT EXIST TODAY

4. WHAT IS FINTECH?

5. DEFINING FINTECH - EXAMPLES
Payment Infrastructure (processing and issuance)
– Square, Ant Financial, Revolut, Stripe
Stock Trading Apps – Robinhood, TD Ameritrade, Schwab
Alternative Lending – Prosper, LendingClub, OnDeck
Cryptocurrency – Bitcoin, etc.
Blockchain – Ethereum (smart contracts)
InsurTech – Lemonade, Oscar, Fabric
Money Transfer – TransferWise, PayPal, Venmo
Mortgage Lending – LendingHome, Better Mortgage

6. DEFINING FINTECH - EXAMPLES
Robo Investing – Betterment, Wealthfront
Neo-Banks – Chime, N26, Monzo
Credit Reporting – Credit Karma, Credit Sesame, Credit.com
Online Business Loans – Ledio, Kabbage
Small Business Credit Cards – Brex, Fundbox
Financial Cybersecurity – Forter, EverCompliant, Crowdstrike
Infrastructure Apps – Plaid, Xignite, Finicity, Yodlee

8. FINTECH TOPS THE LIST OF DISRUPTION OPPORTUNITIES

9. THE 10 BIGGEST FINTECH COMPANIES IN THE U.S. 2019
1. Stripe, $22.5 billion
2. Coinbase, $8 billion
3. Robinhood, $5.6 billion
4. Ripple, $5 billion
5. SoFi, $4.4 billion
6. Credit Karma, $4 billion
7. Circle, $3 billion
8. Plaid, $2.65 billion
9. Avant, $2 billion
10. Zenefits, $2 billion
8. Plaid, $2.65 billion

10. FIN vs TECH
- Banking
- Trading
- Real Estate
- Insurance
- Wealth Management / Investing
- Payments
- Lending
- Blockchain
- Artificial Intelligence
- Cybersecurity
- Data Analytics
- IoT
- Mobile
Other
Industries

11. FINTECHS IN FIGURES AND TECHNOLOGY
- Overall investment in fintech leapt ahead in 2018, reaching US$55 billion
worldwide
-- Double the year before.
- Big Technology companies such as Amazon, Apple, Alibaba, and Google
will continue
to grow into the FinTech sector.
- Major areas of focus - payment services hold the key—helping consumers
simplify
and streamline their lives while offering companies data about where and
when
consumers spend their money.
- Financial services business need to build relationships with their

12. FINTECH GROWTH - WORLDWIDE

14. DEFINING FINTECH

15. THE GLOBAL FINANCIAL CRISIS OF 2008 DRIVER OF CHANG
President George W. Bush signed the $700 billion bank
bailout bill on October 3, 2008.

16. THE GLOBAL FINANCIAL CRISIS OF 2008 DRIVER OF CHANG

17. THE GLOBAL FINANCIAL CRISIS OF 2008 DRIVER OF CHANG
President George W. Bush
signed the $700 billion bank bailout
bill
on October 3, 2008.
Nearly 10 million
homeowners lost their
homes to foreclosure sales in
the U.S.

18. TO BIG TO FAIL – WHO WALKED AWAY WITH THE MONEY

19. Joseph Cassano, AIG Financial Products - $280M
TO BIG TO FAIL – WHO WALKED AWAY WITH THE MONEY
Vikram Pandit, Citigroup – $10.8M
Robert Rubin, Citigroup Board - $124M
Ken Lewis, Bank of America CEO - $145M
Jamie Dimon, JPMorgan Chase CEO - $95.7M
Lloyd Blankfein, Goldman Sachs CEO - $1
John G. Stumpf, Wells Fargo CEO – 13.8M
John J. Mack, Morgan Stanley CEO - $77.7
John Thain, Merrill Lynch CEO - $83.1M

20. LOOKING FOR OPPORTUNITIES – REMEMBER PESTEL
Change Brings Opportunity

21. FINTECH: A NEW ERA FOR FINANCE, PAYMENTS, AND BANKING
Investing - Today, human brokers conduct just 25% of US stock-market. – Technical Change
Payment Systems - New digital payment systems stand poised to eliminate the use of credit and debit
cards and change the nature of online banking. And, there is a whole generation of young people who
are quite comfortable with the idea of never having to carry cash or even a credit card for their daily
needs. – Social Change
Lending - Low interest rates and steady US economic growth have encouraged more small
businesses to seek affordable credit and more consumers to borrow or refinance high-interest debt.
LendingClub, SoFi and other online-lending upstarts have a competitive advantage over banks
saddled with legacy technology. However, these companies lack access to the stable, low-cost
funding sources that regulated banks enjoy. – Economic Change
Insurance - Funding to insurtech companies—those applying new technologies, behavioral finance and
data analytics—reached record levels in 2018, totaling US$4.15 billion in 2018, up 87% from the previous
year. The new companies are focusing on keeping costs and premium rates low by processing most
everything via mobile applications. – Technical and Legal Change.
Real Estate - The real estate sector has lagged other areas of financial services in its adoption of
technology. More data are being produced to make better decisions on how to underwrite and invest.
Technology-tools are created to streamline workflow for brokers, agents and loan officers. More innovation is
happening around these business models, with several well-funded fintech companies buying and selling
houses from their own balance sheets. – Social, Technical, Economic

22. WeChat users can text, shop, move money and invest from the same phone app.
IT’S ABOUT OWNING THE MARKETPLACE and PROVIDING CONVENIENCE
Alipay, the Chinese payments service (a unit of e-commerce giant Alibaba), makes online
finance simpler and more intuitive by turning savings strategies into a game and
comparing users’ returns with those of others. It also makes peer-to-peer transfers fun
by adding voice messages and emoticons.
- If you don’t mind the Chinese government tracking you.
These innovative mobile applications allow your customers to make simple
and secure one-touch payments, both in-store and online.

23. Moneysupermarket.com started with a single product springboard—consumer
mortgages—and now not only offers a range of financial products but serves as a
platform for purchases of telecom and travel services, and even energy.
Amazon books to Amazon everything – They had the customer
– GV cannabis accessories company
Facebook – Digital Currency (Libra) – Has a customer base 2.4 billion people – There
are 7.5 billion people in the world. China’s Online Alibaba only 600 million users.
Tesla Inc. (TSLA) offers its own car insurance, Greensky Inc. (GSKY) helps home
improvement contractors offer financing to borrowers in their homes and Affirm puts
credit into an e-commerce check-out experience. You don’t need to shop for finance,
because it will now come to the point of sale directly.
IT’S ABOUT OWNING THE MARKETPLACE and PROVIDING CONVENIENCE

24. - Better / Easier
- Faster / Convenience
- Cheaper
APPS DRIVING CHANGE/USAGE

25. INNOVATION

26. People want this People don’t want this
INNOVATION – KNOW YOUR CUSTOMER

27. THE EXPERIENCE ECONOMY

28. THE CUSTOMER EXPERIENCE

29. THE CUSTOMER EXPERIENCE
User Interface / User Experience

30. Desktop, Mobile, In-store

31. Buyer
User Implementer
Seller
Confusion
CONFUSION ON THE SALES IMPLEMENTATION PROCESS
Buyer vs User / Seller vs Implementer

32. FINTECH STARTUPS FACE A NUMBER OF CHALLENGES
1. Raising Venture Capital or Strategic Financing
2. Having a Great Investor Pitch Deck
4. Competing With Huge Financial Brands
3. Regulatory Issues for Fintech Companies
5. Cost-Effective Marketing to Acquire Customers
6. Getting Early Adopters and Avoiding Slow Sales Cycles
7. Cybersecurity and Data Privacy Issues
8. Intellectual Property and Technology Issues for Fintech
Companies
9. Business, Revenue, and Expense Model Issues
10. Legal Issues for Fintech Startups

33. BANKING

34. Small & Medium Size
Enterprises

35. TWO-SIDED MARKETPLACES

36. OPEN BANKING
Open banking is a financialservicesterm as part of financialtechnology that
refers to: The use of open APIs that enable third-party developers to build
applications andservices around the financialinstitution.

37. OPEN BANKING

38. OPEN BANKING

39. OPEN BANKING
As “open banking” expands globally, along with PSD2
(the European Payment Services Directive applicable to
the payments industry) and GDPR, new opportunities
are emerging for Fintech companies.
The introduction of new regulations is leveling the
playing field and creating new opportunities for products
and services in both the B2C and B2B spaces.
Although large incumbents have been working to
address these changes, they are generally slower than
the average Fintech company; speed to market is an
important competitive advantage but might not be
sustainable over the long term.

40. OPEN BANKING – PSD2

41. OPEN BANKING – AREAS OF OPPORTUNITY
- Allows banks to bring in third parties partners that can
provide value-added services.
- FinTech’s can leverage a bank’s license to create better
products and services - Banking as a Service (BaaS).
- FinTech’s can create customer focused interfaces to increase
customer satisfaction – Banking as a Platform (BaaP).
- Model company to look at iZettle by PayPal.

42. BANK/FINTECH – AREAS OF OPPORTUNITY

43. PAYMENTS

44. PEER-TO-PEER LENDING/CREDIT

45. 1. Borrower Defaults – Loans are usually unsecured loans, meaning there are no assets backing the loans (such as a
house in a mortgage loan). So, if a borrower defaults on the loan there is little an investor can do. You just take the loss
of whatever amount of principal is left unpaid. With p2p lending default rates averaging 3% a year, most investors will
encounter defaults at some point.
2. Poor Loan Diversification - Let’s say you have $5,000 to invest. It would be a huge mistake to invest in five different
loans of $1,000 each – if one loan defaults you will lose 20% of your money. It would be better to invest in 200 different
notes at $25 each, so one default will not impact your bottom line very much.
3. Bankruptcy of Lending Club or Prosper - Both were losing money but are now profitable. In the case of a bankruptcy,
both companies have a backup loan servicer that is expected to continue processing borrower payments. but there is no
legal precedent for a bankruptcy of a peer to peer lender so no one knows exactly what would happen. Risk/Return
Tradeoff
4. Interest rates may rise - We are currently in the midst of the lowest interest rate environment in many decades.
Eventually interest rates will rise and the impact this will have on p2p lending is unknown. Right now, it is relatively easy
to attract investors with expectations of returns of 8-10% or more. But a few short years ago investors could get FDIC
insured returns of 6%. If we return to an environment like that investors may leave for safer returns elsewhere. In a
couple of years you may well get an FDIC insured account at a higher rate.
5. Regulatory changes - Peer to peer lending is still a new industry and the government doesn’t quite know what to do
with it. Lending Club and Prosper are regulated by the SEC in a similar fashion to stock brokers and investment banks
(institutions that have little in common with p2p lending). While there has been talk of regulatory changes nothing has
happened yet. There is, of course, a slight possibility that the entire p2p lending concept could be legislated out of
existence, but unlikely at this point.
PEER-TO-PEER LENDING/CREDIT RISKS

46. TRADING / WEALTH MANAGEMENT
High Frequency Trading
Robo Advising/Trading
Mobile / Commission Free

47. KNOW YOUR CUSTOMER

48. STARTUP / BUSINESS DEVELOPMENT POINT OF VIEW
Fintech Potential: Top 10 Opportunities to Transform Financial Industry with the Use of Technology
1. Mobile Banking and Financial Inclusion for Underserved
2. Smart Personal Finance Management
3. Affordable and Easy Accounting for Small Businesses
4. Innovative Payment and Money Transfer Processing
5. Peer to Peer Lending and Microfinancing
6. Accessible Investing and Online Trading
7. Simplified Crowdfunding
8. Big Data and Predictive Analytics for Fintech
9. Digitized Insurance Experience
10. Blockchain and Digital Currency

49. FINTECH - AREAS OF OPPORTUNITY – A 7-STEP PROCESS
STEP 1: Identify your Niche
STEP 2: Know the Regulations
STEP 3: Discover your Edge
STEP 4: Hire the Right Talent along with the Right
Tech Stack
Step 5: Start by creating an MVP (Minimum Viable Product
Step 6: Get Funded
Step 7: Build Partnerships

50. Fund Movement, or transactions by giving or receiving payments.
- Currency / Payment Solution / Remittances
Fund Placement, or the financing of planned or unplanned financial
regulations.
- Saving / Investing / Borrowing / Alternative Financing
Data Management, to get insights for improving decision making
- Financial Management Tools / Research and Data Analysis
For starting a fintech company, one must be crystal clear of the target
market and the problem they are looking to address. Besides choosing
a domain, your product should cater to a specific audience, e.g., a
country, a state, a city or a particular demographic. However, it is
always better to launch your startup locally first and expand to the
STEP 1: IDENTIFY YOUR NICHE – WHICH DOMAIN CAN YOU B

51. STEP 2: KNOW THE REGULATIONS
Jay Clayton -
SEC
“My number one concern is protecting
the public and investors.”
Jerome Powell
U.S. Federal
Reserve
“The Federal Reserve is committed to
fulfilling our statutory mandate of stable
prices and maximum employment.”

52. Every unique product or innovation that has been able to disrupt a
sector successfully has always been the one that has done something
differently.
There couldn’t be a better example for this scenario than Robinhood.
With their unique business strategy and viral marketing campaigns,
they were able to successfully disrupt the trading and investments
domain.
Their distinctive business offering, like charging zero commission
proved to be an instant hit amongst millennials with limited pocket.
The danger for startups is to become a “me too.”
STEP 3: DISCOVER YOUR EDGE

53. A successful enterprise is made from its people.
It’s not just the technical skills, but also the business
skills that make a difference.
Talent can be acquired globally and often at a better
value
– The key is communication.
STEP 4: HIRE THE RIGHT
TALENT

54. An MVP is a development technique in which a new product or website
is developed with just enough features to suffice for the early users of
the product.
The final product, with all the elements, is only designed and
developed once the feedback is received from the initial users.
STEP 5: START BY CREATING AN MVP (Minimum Viable Pro

55. BUILDING AN MVP IS OFTEN RELATED TO AGILE DEVELOP
Advantages of this approach:
1. Cheaper: An MVP saves you a considerable amount building incrementally
saves on the
cost of development and allows the customer to provide input on the direction of
the product as it is being built.
2. Effective: Using the MVP approach means you end up with only those features
that you
require the most, so, there is comparatively less façade, and your product turns
out
cleaner and simpler.
3. Faster: You’re not trying to create a perfect product right away; it serves as a
platform
to implement the idea, study its use, make modifications and then proceed
further.

56. Having a well-defined product / service increases the
chances of getting funding.
Being able to show relevance (better, faster, cheaper)
and target market segments increases the odds of
success.
Having a well-defined value proposition makes
understanding easier.
Differentiation from competition brings value to the
marketplace.
STEP 6: GET FUNDED

58. STEP 7: BUILDING PARTNERSHIPS

59. USING FINTECH TO DEMOCRATIZE FINANCIAL SERVICES
GOAL: To bring individuals into the banking system that previously did not have access.
MARKET SIZE: Two billion people in the world that live outside of the U.S. financial
system. - United States = Over 70 million people who live outside the financial system.
TECHOLOGY: Is the enabler. Smart Phones are a practical and effective solution.
COST/REVENUE: The cost of basic transactions can be lowered by as much as 80 to 90%.
- In addition to making transactions fast, simple, easy to understand, and less expensive.
- Costly physical bank buildings are no longer necessary.
REASON: To give individuals an easier way to; save, spend, and transfer money.
SERVICES: Paying a bill, cashing a check, sending money to loved ones, getting
credit—all these are incredibly time consuming and very expensive (cost estimated at
10% in fees and interest rates).

60. DEMOCRATIZING FINTECH

61. BARRIERS TO DEMOCRATIZING FINTECH

62. ENABLERS TO DEMOCRATIZING FINTECH

63. FINTECH INNOVATION FOCUSES ON STARTUPS

64. A STARTUP EXAMPLE

65. COMPLIANCE

66. LARGE COMPANY FOCUS

69. FINTECH INNOVATION AREAS BUILDING CAPABILITY

70. INTEGRATION / BUNDLING / UNBUNDELING

71. INTEGRATION / BUNDLING / UNBUNDELING
Bundle insurance so only one company to
deal with;
- One payment
- Possible lower cost
- Investment/wealth management options
Bundle banking;
- Savings
- Mortgages
- Branded Visa Card
- Retirement accounts

72. TRADITIONAL
FINANCIAL
INSTITUTIONS:
- Commercial Banks
- Private Banks
- Credit Card Companies
- Brokerage Firms
- Insurance Companies
- Credit Rating Agencies
INTEGRATION / BUNDLING / UNBUNDELING

73. MOBILE

74. SOFTWARE DRIVES BUSINESS

75. APPLICATIONS OF BLOCKCHAIN IN FINANCE

76. CRYPTOCURRENCY
Countries – China – Venezuela – Safety – Inflation – Athena ATM
Global
Governance
GV Chinese Yuan
-- Coronavirus

77. DIGITAL CURRENCY
Digital currency is a type of currency available in digital form. It exhibits propertiessimilar tophysical currencies but can allow for
instantaneous transactions and borderless transfer-of-ownership. Examples include virtual currencies, cryptocurrencies, and central bank
digital currency.

78. TRANSFORMATION OF FINANCIAL SERVICES -
TOKENIZATION
Tokenization (Digitization of Assets) describes the conversion of assets with
economic value such as property, art or wine into digital tokens that can be
stored and managed on a Distributed Ledger Technology such as
blockchain.
Each token represents participation rights in the underlying asset–for
example, a painting–and those tokens can then be traded on a platform
such as blockchain.

79. TOKENIZATION OF ASSESTS

80. TOKENIZATION OF ASSESTS

81. • Access to alternative investments such as venture capital, commercial real
estate and hedge funds has historically been restricted to institutional
investors and high-net-worth individuals. ACCREDITED INVESTORS
• We are seeing a confluence of factors breaking down the demographic
barriers to retail investors and expect access to become much easier. On the
regulatory side, in the United States, the Securities and Exchange
Commission (SEC) indicated that it is open to exploring ways to increase
access for retail investors to private markets and other alternatives. SHIFT TO
KNOWLEDGABLE INVESTORS RATHER THAN FINANCIALLY WELL-OFF
INDIVIDUALS
• Technology is allowing fintech platforms that facilitate investing in alternative
assets such as property, private companies, collectible cars and fine art. While
the portfolios of retail investors today tend to be a mix of equities and bonds,
retail portfolios of the future will be much more diverse and include more
DEMOCRATIZATION OF ALTERNATIVE INVESTING

83. Ways Security Tokens Can Change The Market:
1. Provides Liquidity
2. Low Cost – Removal of Middlemen
3. Fractional Ownership – Expanded Markets – Increases the potential investor base
4. Tradability – Can use secondary markets, Blockchain Smart Contracts
5. Asset Interoperability
6. Global Access
7. 24/7 Trading & Reduced settlement times
8. Automated Compliance
9. Programmable Contracts – Automated Dividends, Voting Rights, Privileges
HOW SECURITIZATION DISRUPTS TRADITIONAL FINANCE

84. THE IMPORTANCE OF CYBERSECURITY

87. THE BIGGEST CYBERSECURITY THREATS
1. SOCIAL HACKING – Employees falling victim to phishing attacks.
2. RANSOMWARE – Hackers encrypting an organizations data.
3. LACK OF CYBERSECURITY MONITORING – Organizations not monitoring vulnerabilities.
4. POOR UPDATING / UNPATCHED SOFTWARE ISSUES – Organizations not doing
maintenance and upgrades of software.
5. DENIAL OF SERVICE (DDOS) ATTACKS – Flooding an organization network with traffic.

88. CHANGE BRINGS OPPORTUNITY

89. HOW CAN YOU IMPROVE THINGS
better – faster – cheaper

90. ADOPTION = AWARENESS / EDUCATION / IMPLEMENTATION

91. AWARENESS

92. AWARENESS

93. BEYOND AWARENESS

94. EDUCATION – FROM AWARENESS TO UNDERSTANDING

95. ACTION

96. KNOW WHERE THINGS ARE GOING AND HOW TO RESPOND
Time to adoption of new technologies is shrinking. Change is happening at a more
rapid pace than ever before.
Populations continue to move to the city.
The role of women has changed. Leading roles in the workforce. Fewer children.
Populations are aging.
More people are living alone.
Widening income gap between the haves and have nots.
Environmental issues / concerns are growing.
???

97. A method to drive user engagement or behavior to achieve a particular goal by using
game-like concepts. The idea is people have natural human interests (including
competition and games) and firms can utilize those interests to engage clients and
would-be clients.
Gamification can also help firms gather crucial data on end customers. And it can
help financial services firms sell their products, but it also connects them directly to
end consumers to offer deeper value, and influence customers in make decisions.
Incorporating gaming dynamics into financial services has the potential to change
how, what and when consumers spend, save, invest, repay and insure.
Gamified finance will become an important new category that helps motivate people
to change financial behaviors and should result in a more engaged, sticky customer
base. This could be disruptive to existing banks as users link their existing bank
account with gamified finance apps and are incentivized to switch their direct
deposit from their existing provider. These apps are adding social games that are
helping them go viral. Having customer financial information is a game changer.
GAMIFICATION

98. GLOBAL INTEREST RATES
SAVING BORROWING

99. AGING POPULATIONS

100. IMPLICATIONS FOR FINTECH – THE WHAT IF’S
- What if there was a World Currency?
-- Who controls / Who manages?
- What if there was just one banking system?
-- How would governments control currency valuations?
- What impact would it have on global issues (COVID-19)?

101. THINK – FEEL – DO